Autodesk 2005 Annual Report Download - page 29

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
We begin Management’s Discussion and Analysis of Financial Condition and Results ofOperations (“MD&A”)
with our overall strategy and the strategy for our major business units to give the reader an overview of the
goals of our business and the direction in which our business and products are moving. This is followed by a
discussion of the Critical Accounting Policies that we believe are important to understanding the assumptions
and judgments incorporated in our reported financial results. In the next section, beginning on page 25, we discuss
our Results of Operations for fiscal 2005 compared to fiscal 2004 and for fiscal 2004 compared to fiscal 2003,
beginning with an Overview. We then provide an analysis of changes in our balance sheet and cash flows, and
discuss our financial commitments in the sections entitled “Liquidity and Capital Resources,” “Contractual
Obligations” and “Off-Balance Sheet Arrangements.”
The MD&A should be read in conjunction with the other sections of this Annual Report on Form 10-K,
including Item 1: “Business,” Item 6: “Selected Financial Data,” and Item 8: “Financial Statements and
Supplementary Data.”
The discussion in our MD&A contains trend analyses and other forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking
statements consist of, among other things, statements regarding anticipated operating expenses, both in absolute
dollars and as a percentage of revenues, future growth opportunities, anticipated future net revenues, revenue mix,
costs and expenses, operating margins, allowance for bad debts, level of product returns, planned annual release cycles
and short-term and long-term cash requirements, as well as statements involving trend analyses and statements
including such words as “we believe” and “plan” and similar expressions. These forward-looking statements are subject
to business and economic risks. As such, our actual results could differ materially from those set forth in the forward-
looking statements as a result of the factors set forth below, in “Risk Factors Which May Impact Future Operating
Results” and in our other reports filed with the Securities and Exchange Commission.
STRATEGY
Our goal is to be the world’s leading design software and services company for the building, manufacturing,
infrastructure, media and entertainment, and wireless data services fields. Our focus is to help customers create,
manage and share their data and digital assets more effectively and improve efficiencies across the entire
lifecycle management processes.
We believe that our ability to make technology available to mainstream markets is one of our competitive
advantages. By innovating in existing technology categories, we bring powerful design products to volume
markets. Our architecture allows for extensibility and integration. Our products are designed to be easy to learn
and use, and to provide customers low cost of deployment, low total cost of ownership and a rapid return on
investment.
We have created a large global community of resellers, third party developers and customers, allowing us
broad reach into volume markets. Our reseller network is extensive, and provides our customers with global
resources for the purchase, support and training of our products in an effective and cost efficient manner. We
have a significant number of registered third party developers, creating products that run on top of our products,
further extending our reach into volume markets. Our installed base of millions of users has made Autodesk
products a worldwide design software standard. Users trained on Autodesk products are broadly available both
from universities and the existing work force, reducing the cost of training for our customers.
Our growth strategy derives from these core strengths. We continue to increase the business value of our
desktop design tools for our customers in a number of ways. We improve the performance and functionality of
existing products with each new release, and we have increased the frequency of our releases. Beyond our base
design products, we develop products addressing specific vertical market needs. In addition, we believe that
migration from our 2D products to our higher priced 3D products presents a significant growth opportunity. While
the rate of migration to 3D varies from industry to industry, adoption of 3D design software should increase the
productivity of our customers and result in richer design data. However, this migration also poses various risks
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